Second Opinion: Trump Plan to Shine Light on Drug Prices a Good First Step

The Trump administration on Monday proposed a rule that would require pharmaceutical companies to disclose the wholesale acquisition cost or “list price” of drugs in TV ads for drugs covered under Medicare or Medicaid.

The move is aimed at pressuring big pharma to lower prices through greater price transparency for prescription drugs and biologics. In announcing the plan, Health and Human Services Secretary Alex Azar said consumers should know if drug companies have pushed prices to “abusive levels.”

Salina Wong, PharmD, Blue Shield of California’s director of clinical pharmacy programs, said the move is a good first step. Wong said consumers and purchasers should “know about drug prices to help apply pressure on drug manufacturers to be reasonable in their launch prices for new drugs and biologics, or to be able to explain their pricing rationale.”

Wong said prices for most drugs are more expensive than ever before and that drug-makers can change a price overnight, some by 50 percent or more and without warning. Drug prices rose 12 percent annually between 2012 and 2017 – about 10 times the rate of inflation during that period, according to a congressional report in March. Bringing transparency will help, since consumers usually only find out when they go to get a prescription filled. Still, more needs to be done, she said.

“Most manufacturers only do TV ads for their newest brand drugs and biologics (treatments the use living organisms),” Wong said. “There are many drugs that manufacturers do not advertise on TV where information about pricing will not be disclosed to consumers.”

Wong said an additional step is needed to translate list-price down to the individual level and bring cost transparency into the process of treatment and prescribing, something Blue Shield has been focusing on with new investments.

“Since most people rely on their physician to advise them and to make decisions about drug treatment, a solution that provides patient-specific drug and cost information that incorporates a patient’s health benefits to physicians at the time of prescribing is also needed,” she said.

Blue Shield of California is collaborating with Gemini Health on a new service that allows physicians to view patient-specific lower-cost alternative medicines and compare prices in real time during a patient visit. The service provides actual patient out-of-pocket cost information that’s based on their health plan benefits and formulary, plus total drug cost savings for up to three lower-cost, dose-matched clinically equivalent alternative medications.

State legislation also aims to lower prices through cost transparency.

In California, the state legislature passed SB17 with bipartisan support and the governor signed the bill into law last year. The new law requires pharmaceutical companies to notify the state and health plans anytime they plan to raise the price of a medication by 16 percent or more over two years. The legislation was supported by a coalition of consumer and labor groups, and health plans including Blue Shield of California.